Why India Still Lags in the Ease of Doing Business Front?

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A government is always judged by its economic reforms. One of the important yardstick to judge a business reform is the 'Ease of Doing Business'.

The World Bank's 2017 'Doing Business' rankings are out. The news for India is not good. We have improved only one spot since last year.

A rank of 130 out of 190 is not something to be proud of. This was the rank we received last year as well. However, the World Bank changed the way it does its calculations. So India's ranking for last year was revised lower to 131. Based on the new method, we have improved by a measly one point.

Even though, the government has been making efforts to improve the business environment, the rankings don't vouch for that.

The competition has increased significantly. The number of countries that have implemented at least one reform has increased from 122 to a record 137 countries. In total, they've implemented 283 key reforms in all - an increase of more than 20% YoY. Developing countries carried out more than 75% of these reforms. Even Pakistan has made it to the top 10 'improvers' this year.

There's no doubt that India is finding the going tough. The government's dream of cracking into the top 50 by 2018 seems to be just that, a dream.

The World Bank's report had some interesting insights.

First, The World Bank issues its reports based on the data that it collects every year up to 30 June. A lot of the Indian government's recent big ticket reforms have come after 30 June 2016. These include the GST bill, the bankruptcy code, and the single window clearance for building plan approvals.

The government asked the World Bank to consider up to twelve such reforms for this year's report. It didn't. These measures will make their presence felt in next year's ranking.

Second, among the ten parameters for rating, on 'getting electricity', India improved from 51st to 26th spot in 2017. For example, it took around four months to complete the process two years ago which is now forty-five days.

Third, The World Bank recognized other achievements by the Indian government i.e. an electronic system for companies to pay employee insurance contributions, easier procedures for exporting and importing, and new special mechanisms for resolving commercial disputes.

We believe, the government is sincere in its push to improve India's business environment. However, the pace of reforms has been quite slow. Therefore, if India has to emerge as an economic superpower, it will have to expedite reforms to improve the business climate in the country.

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